Forty years after the Tazara Railroad marked the beginning of modern China’s involvement in Africa, the country’s relationship with Tanzania is still one of the best on the continent

By Iain Manley

In February 2009, during a state visit to Tanzania, Hu Jintao said China's ties with the country could "be viewed as an exemplary relationship of sincerity, solidarity and co-operation between China and an African country, and for that matter between two developing countries."

Although this might sound a lot like diplomatic hyperbole, China’s president was not exaggerating, at least not entirely.

His country’s ties with Tanzania are among the oldest and strongest it has with any African nation, and China’s emergence as one of the continent’s most important markets and sources of investment bodes well for the East African country, if it can leverage this special relationship, along with its strategic location, to transform itself into a regional hub.

A Lasting Relationship

China and Tanzania have had formal diplomatic ties since the latter was established in 1964, at a time when many of Africa’s newly independent nations preferred to recognize Taiwan. Julius Nyerere, the country’s first president, visited China 13 times during his lifetime, mostly during the course of his 20-year rule. He built a strong relationship with Mao Zedong — both countries make occasional references to the bond shared by their founding fathers — and, after an early trip there in 1965, became an admirer of China’s system of agricultural collectivization. (He was, admittedly, given a largely inaccurate picture of the system, and its supposed success.)

Chinese collectivization is seen by some as an inspiration for Ujamaa, the set of political and economic policies first outlined by Nyerere in his famous Arusha declaration of 1967. Ujamaa centralized political power and turned Tanzania into a single party state. Key industries were nationalized and an emphasis was placed on self-sufficiency, and an end to Tanzania’s dependence on aid from the United Kingdom, its former imperial master, and the UK’s capitalist allies. At the heart of Ujamaa was the collectivization of agriculture in the country’s villages, which led to forced relocations, purportedly so that the population could be connected to infrastructure – but in many cases the promised infrastructure was never put in place.

Tazara

One major infrastructure project was completed during the Ujamaa era: the highly symbolic Tazara railway, which connected landlocked Zambia with Dar es Salaam, Tanzania’s capital city and most important port. Zambia had also recently gained independence from Britain, but political conditions in neighboring Rhodesia (now Zimbabwe) and Angola threatened the copper exports that were a cornerstone of the Zambian economy.

It was initially thought that finance for the project would come from the World Bank, but after a feasibility study concluded that the route was not economically viable, China stepped in, thanks in no small part to Nyerere’s relationship with Mao. The project was completed between 1970 and 1976, at a cost of $500 million, making it the largest foreign aid project in Chinese history. It was built by an estimated 50,000 Tanzanian and an additional 25,000 Chinese laborers, with funds generated largely by the sale locally of consumer goods from China. Tazara is considered a prototype for Chinese aid projects in Africa, and is mentioned whenever the subject is raised, but China was involved in other projects in Tanzania at roughly the same time, including the Friendship Textile Mill and Kiwira Coal Mine, which remain important today.

In return for China’s munificence, Tanzania became one of the staunchest supporters of the One-China policy at the UN. Nyerere leveraged his status as one of Africa’s most prominent liberation leaders and a founder of the Non-Aligned Movement to gather support for the PRC’s accession to the UN — and the consequent ousting of the ROC — which only succeeded after 20 failed votes. When the vote eventually passed, in 1971, Tanzania’s representative, Salim Ahamed Salim, is said to have danced on the floor of the UN assembly hall.

Bad Advice

Despite China’s aid, Ujamaa was a complete economic disaster. Tanzania went from being Africa’s largest exporter of agricultural products at liberation to its largest importer. Nearly half of the 330 companies nationalized by Nyerere went bankrupt, and the remainder were limping along at 20 percent of capacity by the time he retired in 1985. There were some positives. Tanzania has one of Africa’s highest adult literacy rates, a result of the universal education policy instituted during the Ujamaa era. Perhaps most importantly, Ujamaa is credited with instilling a sense of national identity in Tanzania, which is often used to explain the relative absence of domestic conflict in the country today. Nevertheless, by 1985, Tanzanians were ready to play the capitalist’s game and enter the free market.

In 1986, Tanzania began an economic recovery program under the guidance of the IMF and World Bank. Typical of structural adjustment diktat at the time, it emphasized privatization, deregulation and trade liberalization. The program is considered a success and good example by many in the development community, but Tanzania’s political elites rankled under the conditions imposed by donor countries. Comparisons to China, which charted its own course from socialism to the free market at roughly the same time, with much greater success, are frequently made.

By the late nineties, Tanzania’s GDP was growing at a steady 5 percent per annum. The environment for foreign direct investment was much improved, especially after the establishment of the Tanzanian Investment Center, a one stop shop for potential investors, in 1997, and between 1999 and 2004 the amount of foreign private capital in the country tripled, reaching $6 billion by the end of the period. But the Tanzanian economy remains almost entirely agricultural. Agriculture accounts for 85 percent of exports and employs 80 percent of the work force. Although there are said to be large mineral deposits that remain undiscovered, the country currently exports very few natural resources.

Today

China’s recent expansion in Africa has been driven predominantly by its appetite for natural resources, so as a source of Tanzania’s FDI, China remains far behind other countries. Accurate statistics are hard to find, but in a statement made earlier this year, Chinese Minister of Commerce Chen Deming said that there are more than 100 Chinese companies doing business in Tanzania with an accumulated direct investment of roughly $200 million. This contrasts starkly with the $7 billion plus that entered the country in 2009, according to the UN. Estimates of the number of Chinese people in the country vary wildly, from the 239 Chinese nationals issued work or residence permits in 2000, to a mysterious 10,000 reported by Xinhua in 2008.

As a trading partner, China is much more important. It is Tanzania’s largest source of imports, and third largest export market, with a trade balance that weighs sharply in China’s favor. Bilateral trade has increased tenfold over the last decade, reaching $106 million by the end of 2009. Tanzania also remains the largest beneficiary of Chinese aid in Africa to this day. Much of this money has been spent on maintaining projects Tanzanians were expected to administer themselves. The Kiriwa Coal Mine, built by China in the early eighties and unsuccessfully privatized in 2005, was last year saved by the Chinese government, which agreed to pump $400 million into its renovation. The typically opaque deal was controversial, not least because former Tanzanian president Benjamin Mkapa was reportedly amongst the mine’s owners. Chinese investors are now majority shareholders in the Friendship Textile Mill, and even the Tazara railway, which has been run down to the point of virtual collapse, is flirting with a Chinese takeover. In 2010, the Chinese government granted the operating authority a $39 million interest free loan and will provide it with six new locomotives at the end of this year.

China is likely to pump even more money into the Tanzanian economy over the next few years. It is a favorite for China’s next rollout of special economic zones, and speculation abounds that China is building infrastructure in Southern Africa with the specific goal of directing more of Africa’s trade into the port at Dar es Salaam, where the Sino-Tanzania Joint Shipping Company has operated for the last 43 years. Friendship seems to have its rewards.

“In Italy what we have is the capacity to continuously innovate products, but its done by small and medium companies, so you need to go there and be with them”

Italy played a major part in the coming of age of China’s “going out” policy. It was here, in 2007, that Zoomlion purchased a 60% stake in Italy construction equipment manfacturing company CIFA, for EUR 163 million (USD 241.4 million), which dwarfed all prior investments that Chinese companies had made abroad.

Since then Chinese investment in the boot of Europe has only picked up as they chased Italian luxury brands for the growing pool of Chinese consumers, and looked to other firms for their technical knowhow.

The Italian government is making sure that the Chinese know exactly what the country has to offer. China is one of a small group of countries targeted by Invtalia, the national investment promotion body, for special attention. The group has been setting up regular seminars to inform Chinese companies what talents are on offer in Italy, what investment incentives are in place, and help the companies speed their way through the national bureaucracy.

Invest In spoke to Giuseppe Arcucci, inward investment director for Invitalia, on the sidelines of the China Outbound Investment Fair in Beijing. He spoke of changes in Italy’s investment climate, sectors that the Chinese need no incentive to invest in, and encouraging Chinese to look at other sectors where Italy has special knowhow.

Q: Is China now a major focus for your institution? A: We have main areas of activity, one is proactive and one is reactive, we have a whole set of services running from general information services to supporting business establishments, we give financial support and can arrange to allow extra personnel to come to Italy for example. All these services are given to any investor from any country that’s interested in investing in Italy in any sector in any region. We call this reactive. The other one is proactive, we identify a few countries in the world in which we do some active promotional activity, and these are China, Japan, Australia, India, gulf area,the US and Israel for technology transfer. In these countries we go and proactively promote Italy through specific sectoral seminars. For example in Japan we run seminars once a year with Mitisubishi bank, last year we did two seminars with 70 selected clients, explaining opportunities in logistics and renewable energy in Italy for example.

Q: Do you have specific sectors you are targeting? A: Logistics, renewable energies, tourism and life science. We think that in these areas we are building expertise and a specific portfolio of business opportunities. The one that we do most is logistics and renewable energies.

Q: What about more common industries such as machine parts or fashion? A: We don’t need to promote them. We support companies that are interested in fashion, food and machinery, some aspects of the automotive chain, design. But you don’t need to promote that, all over the world they know we can do that. We are trying to focus on some sectors that we think there is future potential. If people from China and are looking to buy machinery, ok, we can give support. Going to explain something abroad is a different thing.

Q: How do your renewable subsidies compare with other European countries A: Our solar subsidies are number one in Europe. There are two forms of incentives: one is a subsidy for each megawatt, and then there is also the possibility to sell the energy produced. We also subsidize wind energy and biomass. In wind most of the capacity has been completed though, so there is not much space for more projects. Our intent is not only to promote investments related to the production of energy, but also to develop some technology in Italy.

Q: Is there any specific investments or companies that are already doing work in that area? A: We supported China Energy Conservation and Environment Protection Group, which is one of the biggest if not the biggest state owned Chinese group in renewable and energy in general. There is also the China Development Bank (CDB) which we have an agreement with and is financing big projects in Italy. There is a fund 90% controlled by Suntech and 10% by a Spanish company, funded by CDB.

Q: Has there been a sizable uptic in investment in italy since the CIFA deal in 2007? A: I don’t think it's related to the CIFA deal, I think it’s related to a general trend. When I started to follow these activities in October 2008, there were 38 Chinese companies in Italy, now, the last official date is 57, and 11 companies were supported by us during this period. When the end of 2010 figures come out in June I expect that [Chinese]companies in Italy will be almost double the 38 companies.

Q: Is there any particularly impetus? A: I think its two or three things together. First Chinese companies are starting to look abroad for investment, in the first phase they looked at acquiring natural resources. So they went to Africa, South America, Australia, wherever, but now with the go abroad policy of this five year plan, I think even more with the next five-year plan, companies are starting to look abroad for the development or the manufacturing of high end products. Since in Italy we have some excellence they are starting to also be more focused on Italy. I think the crisis also made them understand that they cannot go on focusing on low-cost, low-quality products, but they need to focus also on the higher end products. In Italy what we have is the capacity to continuously innovate products, but it's done by small and medium companies, so you need to go there and be with them in order to use the competence that has been developed in these specific areas and these specific sectors.

Q: Of Chinese companies in Italy how many are in your targeted sectors, how many in more generic sectors such as fashion? A: The majority are in commerce. But obviously there is a good presence in logistics, among the first Chinese companies to invest in italy were the logistics giants such as COSCO and Hutchinson. We also see new trends in renewable energies and machinery.

Q: Is it a different experience working with state-owned enterprises (SOEs) vs. private companies. A: Some private companies need more help than SOES, especially the smaller ones but the bigger companies are about the same. Some of the smaller private companies are not well prepared, they just want to go to Italy. They make a decision and then they try to understand the market. Maybe that’s linked with how the Chinese economy has grown; they grab the opportunity and the risk. So we try to guide them to be better prepared for the Italian business environment especially, which is pretty different from China.

Q: What markets are Chinese companies in Italy looking at? A: There are different kinds, some come to develop knowhow, some obviously come to be close to Europe, and then there is a third which we hope will grow in the future, that comes to buy Italian companies to produce goods. This is still small, but in the future we think this is going to be a trend, because there are some products that need to be produced close to the market. I think in the next 10 years we will see more and more Chinese companies coming to Europe to produce.

Q: Italy and China famously had some trade problems a few years back, do you find this new investment relationship is helping ease trade tensions? A: Up until two years ago, three years ago, there was something of a tension regarding the Chinese world in general, but this has dramatically changed in the last 2-3 years – there is more openness to cooperation with Chinese companies. On October 7, Wen Jiabao and Berlusconi met, and announced that Italy and China are aiming to double trade to EUR 80 billion by 2015. And obviously in their speech they spoke of the importance not only regarding trade, but also in investments. That is to say the general mood has changed, it's not any more a matter of fear, it's just trying to find the right way to cooperate. There are still some worries about [IP protection] but this is not a problem with big companies, which is why we try to focus on bigger companies. There is also more interest from Chinese companies to come to Italy to buy Italian made products to sell in China. They want Italian made products because they want to service the new Chinese middle class.

Q: In your experience what difficulties have Chinese companies had in Italy and how have they been able to overcome them? A: I think the main difficulty is regarding the visa, and the culture. Not in the real cultural sense, but in all the procedures for the authorization and this kind of thing. This is something that’s a problem for Chinese but also for non-Chinese: English or Germans or those from the US. Now there are specific services to mitigate this problem, which is why I think there’s been more activity than in the past. The government is trying to introduce new regulations, to make it more simple to open a company in Italy, but you know, honestly I have to say this is still a problem. This is the main thing we help with.

Q: What’s the average time to open a company and how long can you guys cut it down? A: It’s not easy to answer this in general, but for example sometimes it can take one year to get a working visa, if you come to us, I cannot say how fast we can arrange it — it depends on which prefecture you are investing in — but there are some cases where we’ve been able to cut down this process to a couple months. There was one case where it was only one month. We are working to simplify the process for the investor, for the investors to understand very quickly if the space is available, what sort of authorization is needed, and what kind of authorization is already there. We cannot say if we can do it in one week or two months, but something that could take two years or three years we can cut down to no more than six to eight months. If you go above the eight months, it starts to be very tricky for them to start an investment, because one year is a long time in this world.

Despite its proximity to Hong Kong, often seen as the natural launchpad for Chinese firms looking to increase their overseas investments, Singapore is increasingly attracting Chinese interest. With recent predictions for Singapore's economic situation looking grim, the city state is increasingly looking to China as a means of offsetting the impact of economic turmoil in the US and Europe.

Following a slump in exports, Singapore's Trade and Industry Ministry said in November that it expects economic growth for 2012 to drop to between 1 percent and 3 percent, down from 5 percent for 2011. The situation could be compounded by employment issues, with the Singapore Manufacturer's Federation identifying the increased costs of hiring foreign workers due to tightened regulations as a concern.

As an entrepot island lacking in resources and dependent on its role as a middleman of world trade, the country has always been particularly exposed to downturns in the world economy.

However, a precedent for increased Chinese activity helping Singapore weather such troubles has already been set. It is thanks in part to China's stimulus plan in response to the 2008 financial crisis that Singapore bounced back so quickly from the economic well it suddenly found itself in.

In the first quarter of 2008, Singapore's GDP grew 17.6 percent year-on-year, according to data from Trading Economics. This plummeted to minus 12.5 percent in the following quarter, and remained negative through to the second quarter of 2009, when it rebounded to 19.5 percent.

Over this period, China's foreign direct investment to Singapore continued to grow relentlessly. Standing at $910 million in 2005, it almost doubled on average year-on-year to reach $9.35 billion in 2009.

Eastern promise

According to official statistics, there were over 3,000 Chinese businesses registered in Singapore as of the end of August, while a recent survey by the Bank of China and Hurun Report said Singapore was the number one emigration target in Asia among high-net worth Chinese looking to relocate.

An influx of Chinese business interest prompted Citi's Singapore branch to set up a China desk in 2010 to cope with demand. By August 2011, the desk's revenues had doubled year-on-year, with deposits from Chinese clients up 33 percent. Alan Lin, head of global transaction services at Citi China, was quoted by the Straits Times as saying that the flow of Chinese companies to Singapore has stepped up in the past three to four years, with a shift towards emerging new companies.

While Hong Kong has obvious appeal to Chinese mainland companies, Singapore retains the edge in a number of areas.

At the beginning of 2011, Singapore tied first place with Switzerland in the Profit Opportunity Recommendation index published by US-based Business Environment Risk Intelligence, based on operations risk, political risk and foreign exchange risk. In the World Bank's Doing Business 2012: Doing Business in a More Transparent World report, released in October and based on regulations measured from June 2010 through May 2011, Singapore ranked top in terms of overall ease of doing business for the sixth year running, while Hong Kong was second.

Michael Zink, Singapore country chief for Citi, told the Wall Street Journal that “Hong Kong has done a wonderful job positioning itself as a place for ratings, equity funding and IPOs for China-based companies. But if you look at Singapore and how it's trying to compete, it's not just looking at Hong Kong. It says, 'how can we compete with London…New York.' There are many other centers in Asia who want to have that same kind of business.”

Golden gate

For Chinese firms looking to expand their overseas operations and shift their focus from the ailing economies of the US and Europe, Singapore offers a gateway to the resource-rich growth economies of the ASEAN, and beyond.

As an ASEAN member, Singapore has free trade access to all member states. It also benefits from the ASEAN tax treaty with India, which is more far-reaching than the double taxation agreement that China has.

Singapore Prime Minister Lee Hsien Loong and Chinese Premier Wen Jiabao met at the latest ASEAN conference in Bali in November, where they affirmed the excellent state of Singapore-China relations and also their commitment to increasing the connectivity of the ASEAN. Loong also urged the ASEAN to explore involving the private sector more in its programs.

This access is sweetened by the revised tax treaty agreed between Singapore and China in 2007. Highlights include withholding tax on dividends paid by a Chinese company to a Singapore resident being cut from 7 percent to 5 percent, provided that the recipient is a company that holds at least 25 percent of the capital of the Chinese company. For all other cases, the withholding tax on dividends was cut to 10 percent from 12 percent.

In addition, the Singapore Economic Development Board has said there are plans for key tax changes in strategic sectors to enhance Singapore's attractiveness as a regional hub. These will include an exemption for all interest payments made by banks from withholding tax, new tax benefits for shipping companies under a maritime sector initiative, and goods and services tax relief in the biomedical sector for imported clinical trial materials.

It was also announced in November that government agencies are spending $23 million developing an integrated system to consolidate and simplify the process of applying for business licenses. Due for launch in 2013, it will offer three times the number of licenses than are available on the current Online Business Licensing Service, allow businesses to apply for multiple licenses from different agencies, and also manage and keep track of all applications.

Structurally sound

Singapore has also embarked on a number of ambitious infrastructure projects that will further its attractiveness to Chinese investment, and demonstrate its commitment to maintaining its lead in key competencies such as shipping and oil. As part of a drive to boost its shipping industry, work is underway on the $570-million phase one of the Sembcorp Marine integrated shipyard facility, due for completion in 2013.

Meanwhile, a huge excavation project under the Banyan Basin seabed is being carried out, which will result in a petrochemical storage facility able to hold the equivalent of 9 million barrels of oil. Costing some $450 million, it is due for completion in 2014.

In addition, Singapore is jumping on the renminbi train, positioning itself to be a major center for yuan internationalization in line with Beijing's ambitions for the rise of the currency's use in cross-border commerce. Deputy Prime Minister and finance minister Tharman Shanmugaratnam has reported having had “good discussions” with Chinese policy makers on the subject, and said Singapore can play a “helpful role as a financial center in that regard.”

The Monetary Authority of Singapore also set up a S$30 billion currency swap facility with the People’s Bank of China in 2010 to boost bilateral trade.

As the yuan program develops, it will further facilitate the operations of Chinese companies operating in Singapore, giving them more flexibility in their cash-flows and trade settlements.

]]>it@mxmedia.com.hk (Super User)SingaporeWed, 20 Aug 2014 00:00:00 +0000Qatar Takes Business in The Middle East to The Next Levelhttp://chinainvestin.com/index.php/en/invest-in/spotlight/eye-on/qatar/419/qatar-takes-business-in-the-middle-east-to-the-next-level
http://chinainvestin.com/index.php/en/invest-in/spotlight/eye-on/qatar/419/qatar-takes-business-in-the-middle-east-to-the-next-level

Whether in politics, finance, media or sports, tiny Qatar continues to cement its strong presence on the global stage and is rapidly becoming the number one investment center in the region.

By Anas Almasri

To the outside world, Qatar’s name is often associated with either significant natural resources or political mediating efforts between conflicting sides in the Middle East.

This small country, however, has a much larger role in the global political and financial community than its land area might initially suggest.

The Arab country has recorded double-digit economic growth during six of the past ten years, and was ranked the fastest growing economy in the world in 2010, with a GDP growth rate close to 16 percent. That ranking is especially noteworthy when compared to the extremely low – or even negative – growth numbers many of the developed countries registered last year. Its GDP growth is expected to reach 20 percent in 2011, according to International Monetary Fund (IMF) estimates. Qatar’s 2010 GDP per capita at PPP stood at a stunning $179,000 ranking it the richest country in the world, ahead of Liechtenstein and Luxembourg (CIA world fact-book estimate).

Governed as an absolute monarchy since the mid-19th century, the country occupies the small Qatar Peninsula, off the coast of the bigger Arabian Peninsula in the Middle East. Its only land border is with Saudi Arabia to the south, with the rest of its territory surrounded by the waters of the Persian Gulf.

Its small, mostly foreign, population and strong governmental support have granted it one of the world’s lowest unemployment rates at 0.5 percent. Qatar also has the second highest human development score in the Arab world, trailing only the United Arab Emirates.

Qatar’s reshaped economy

The Qatari economy is an industry driven one, with oil and gas exports accounting for more than half of its total GDP (which was around $150 billion in 2010). Energy exports also represent some 85 percent of export earnings and 70 percent of government revenues. The economic downturn it faced during the 1980s and mid 1990s with fluctuating oil prices, truly exposed Qatar’s overreliance on the oil industry. Additionally, several reports indicate that Qatar’s oil is expected to run dry soon, if current production levels are maintained.

Building on that realization, the government has turned its focus to the development of its gas sector. The world’s third largest proven gas reserves, exceeding 25 trillion cubic meters, are sitting under its 11,500 sq. km land. Those supplies are 14 percent of the total global gas reserves, and will ensure stable economic growth for the country, as worldwide demand for liquefied natural gas (LNG) continues to rise. Its LNG capacity, as estimated by the IMF, will reach a peak of 77 million tons per year in 2011, compared to only 30 million in 2008, signaling the benefits of these development projects.

Learning from its earlier setback with oil, Qatar is maximizing the potential of its natural gas industry while creating a “trickle-down” effect to other segments of the economy. Through this initiative, primary competencies and competitive advantages gained in the energy industry will be transferred to other industries. Many of Qatar’s main industrial and urban projects are built in close proximity to large oil & gas refineries and vibrant seaports, for example.

Authorities have implemented several economic diversification plans to increase local and foreign investments in non-gas related projects and recent economic policies have emphasized the importance of developing Qatar’s non–energy sectors. Expanding the services sector is now a top priority for the government, especially in finance and tourism. Substantial investments are also being directed towards large-scale infrastructure projects, including transportation and water systems, and social foundations such as healthcare and education services. Other important Qatari industries also include fertilizer production, steel, cement and commercial ship repairing.

A buoyant financial center

Qatar’s financial sector is vibrant and growing rapidly. An increasing number of employees are taking on financial services jobs every year. The country reportedly created an estimated 5,200 new jobs in the finance sector in 2010 alone, taking the total number of jobs employed by the financial services industry to over 20,000 at the end of last year. Timely governmental interventions and strong support ensured that Qatar was well positioned to weather the global financial crisis, and that its banks and financial institutions remained healthy.

Qatar Central Bank (QCB) supervises the banking industry by monitoring the commercial banking system and formulating relevant monetary policies. QCB, through its newly launched Financial Stability Unit, has been instrumental in guaranteeing the stability of the financial system as a whole. Its efforts have reduced banking exposure to bad loans and risky assets, through such measures as keeping bank credit growth in check, limiting banks’ involvement in proprietary equity investments and the financing of real estate projects, constraining their foreign currency exposure levels and banning banks from providing financing for securities trading purposes. The government had also supported the banks in 2009 by undertaking two rounds of capitalization and through buying up some of the local equity and real estate assets they had piled up before the crisis hit.

The authorities opened up new channels for overseas inward investments when they announced the issuance of several types of bonds in 2009 with the aim of creating a sovereign benchmark yield curve. The move was intended to facilitate bond issuances by state-owned companies and commercial banks, and it did just that. Earlier this year, the IMF reported that “external borrowings” of both sovereign entities and business corporations in Qatar doubled to $70 billion from 2008 to 2010. The report also showed that the country’s “sovereign and guaranteed external debt” is mainly long term and that, given the state of its current debt payments profile, it was unlikely that Qatar would face any refinancing problems in the foreseeable future.

In the latest Global Financial Centers Index (GFCI) ranking, Qatar just overtook Dubai as the highest ranked financial center in the Middle East, and ranked 30th globally. The Emirate of Dubai has been constantly ranked number one in the region with respect to financial services since the twice-a-year index was launched back in 2007, sponsored by Qatar Financial Center Authority. The GFCI also pointed out that Qatar’s finance industry is strongest in reinsurance, captive insurance and asset management services.

2022 FIFA World Cup

“Expect Amazing” was the slogan of the Qatar Bid committee, which entered into the race to host the prestigious football tournament. The FIFA World Cup is expected to draw roughly half a million visitors and football lovers to Qatar, which is a third of its current population, and it will be the first time the event is held in a Middle Eastern country. The FIFA competition is anticipated to have a major impact on Qatar’s economy during the next decade, as initial estimations suggest that some $65 billion will be spent to prepare the country for such a huge sporting event. Before winning the bid, the government had previously announced its plans to spend up to $100 billion on infrastructure projects as part of its impressive “National Vision 2030” to modernize the country. Landing the World Cup event will now accelerate the completion of many of these projects.

The government is said to be planning to cover $40 billion from the total required investments, with the rest supplied by state entities like Qatar Petroleum. Qatari authorities have declared the launch of 200 projects in different areas only as an initial phase, including major projects in transportation, tourism, healthcare, education and housing sectors. Projects in the pipeline or already started include a $25 billion metro and rail network, a $20 billion sum to build and expand roads and a $10 billion investment on the new Doha International Airport. An additional $4 billion has been set for the construction of stadiums and sport facilities. Qatar’s banks are highly tipped to benefit from increased demand for financing and stronger financial activity on the back of these massive planned projects. A number of European companies have already secured bids for some of the construction developments in Qatar, but many bids are still open and several major Chinese construction groups are reportedly involved in the bidding marathon. Overall, the 2022 World cup is expected to considerably raise the Foreign Direct Investment flow into the country.

Sino-Qatari investments

With Qatar’s ample resources, especially in LNG, and China’s ever-hungry economy for energy to fuel its continuous growth, it is no wonder that the two countries have been working towards strong bilateral relations. Recent agreements have facilitated enhanced cooperation between governments and corporations on both ends, especially in the utility and infrastructure sectors. Huawei, Sino-Hydro and some 30 other Chinese entities are doing business in Qatar; according to the Chinese embassy in Doha, they had gained contracts worth over $3 billion up till the end of 2010.

During the past two years, two major energy-related deals were signed between China and Qatar, both of which were focused on gas exploration. China’s CNOOC, the nation’s third largest oil company, had signed a 25-year agreement with Qatar Petroleum for offshore gas exploration in the Arabian Gulf state. That deal included the drilling of three wells in five years. CNOOC’s chairman, Fu Chengyu, forecasted China’s need for Liquefied Natural Gas to hit 40 million to 60 million tons a year by 2020. Last year, China National Petroleum Corp (CNPC) and Shell, inked a 30-year exploration and production agreement with Qatar Petroleum that covers over 8,000 sq. km, located on both land and sea in Qatar.

Conversely, 2011 witnessed the launch of a $10 billion petrochemical joint venture between the same parties (CNPC, Shell and Qatar Petroleum), but on Chinese soil. The proposed refinery is to be built in Zhejiang province, in Eastern China, where local authorities have also signed the framework deal. The project follows a giant supply agreement between both governments, and is the first solid foothold for Qatar and Shell in China.

China’s agriculture investments in Kazakhstan and Laos have faced very different political reactions.

If you’re involved in agribusiness in China one statistic matters more than all others. The country has to feed 20% of the world’s population on 7% of its arable land. And that land bank is shrinking, rezoning approvals rose from 40,000 to 125,000 hectares between 2003 and 2009 according to the Ministry of Land & Resources.

China is dealing with that by “going out,” with an assortment of private sector initiatives and a US$ 4.1 billion fund to invest in agricultural projects overseas. If properly executed, these initiatives can bring Chinese cash and agricultural know-how needed by smaller agricultural-oriented neighbors. As is clearly seen from the case of Laos.

The winds of trade

Chinese agri-investment however has faced less opposition in Laos, where China recently overtook Thailand as the largest single foreign investor. Higher prices in China than domestically or in Thailand make it an attractive market for Laotian farmers. The provincial Industry and Commerce Department in Laos’ northerly Bokeo province has reported that it expects to ship a record 30,000 tons of rice to China in 2010, compared to 20,000 tons shipped to Thailand, the country’s traditional export market.

Aid officials and EU diplomats in Laos speak of an influx of Chinese food growers, farm managers and food processing companies, as Chinese investment in Laos has almost doubled from $1.1 billion in 2007. Very little of this money comes from major state projects, much of the investment comes from small-scale Chinese food companies which use family ties to exploit cheaper land and labor resources in Laos to produce food for China, where prices are higher. Mid- and large-sized companies meanwhile typically deal with village and provincial governments in Laos: village co-operatives produce crops for Chinese buyers in return for seeds, machinery and technical advice.

Sweetcorn is also exported to China through the border checkpoint in Sing district, Luang Namtha province. Farmers are switching from growing sweetcorn to producing watermelons and pumpkins for export to China. Other crops under consideration include Job’s tear, sesame and legumes, said Mr Somchin. Laos also has considerable pools of strategic resources. Chinese hold 50,000 hectares of rubber plantations, a resource which is becoming an increasingly important import for China’s rapidly expanding auto industry.

More than just agriculture

While there are obvious benefits for Laotian farmers in terms of technical knowledge transfer there are far greater benefits for China’s commercial presence in the country, which has extended to forestry (legal and illegal logging) as well as mining and hydropower. Market leader Sinohydro has advised on several dam projects from an office in Vientiane, which produce electricity which is then exported to Thailand.

Chinese export-focused businesses have also reaped benefits: manufacturers have shifted some operations southwards across the border to exploit the preferential treatment extended to the EU and US thanks to Laos’ leastdeveloped country status. State-owned Yunnan Construction controversially built the stadiums Laos needs to host the Southeast Asian Games – a loan from the China Development Bank got the firm the stadium contract in exchange for a lease on the land on which it will build a high-rise quarter, called Chinatown. Chinese construction firms and investors have also been active on projects such as the Talat Sao mall, built by Chinese investors and crammed with Chinese consumer goods such as Lenovo computers and Konka TVs.

There are good reasons for investing in Laos. Crucially, the Communistrun state, unlike Thai land, al lows foreigners to establish 100% foreign owned companies, a carrot for firms seeking a Southeast Asian base. Also, WTO membership and a railway link to Thailand are useful for foreign investors. Infrastructure however remains primitive compared to China or Thailand. China may help in that regard. The government is promising a rail-line connecting Yunnan’s capital of Kunming to Laos and Thai land. This would ultimately alter Laos’ longtime mooring to Vietnam. For years Laos lived in the shadow of its eastern neighbor Vietnam, which frequently dictated Vientiane’s position, without guiding it to the kind of economic prosperity it has itself enjoyed.

Growing Global

Asiano perations will be a proving ground for emerging Chinese agr ibusiness conglomerates l ike China Nat ional Cereals, Oi ls and Foodstuffs Corporation (COFCO) which is attempting to remake itself in the mould of the world’s largest agricultural commodities firms such as Minnesotabased Cargill which has extensive interests across Asia.

In its previous incarnation as a monopoly trader COFCO had concentrated on developed Western markets, but now the firm is about to indirectly expand its footprint in southeast Asia: in September launched a US$ 1 billion agricultural investment fund with three partners, one of them agricultural commodities giant Louis Dreyfus Corporation, which has significant plantations in Laos.

While a hunger for land among industrial and real estate developers suggests there’s no end in sight to China’s food security issues there are obstacles to farming abroad, such as getting the produce back on lousy infrastructure, and overcoming the difficulties of local politics. Yet if China can learn how to assuage local fears, it has enough money and agricultural expertise to offer sizable benefits to developing countries like Laos. In any case to feed itself China may find it has no option but to farm next door.

While Laos has done quite well from Chinese agriculture investments, Kazakhstan is a different story. Kazakhstan’s relatively sparse population (20 million) on a vast acreage (it’s the 9th largest country in the world) makes the Central Asian state an ideal exporter of food. China is currently cooperating with the Kazakh government to grow soya beans on almost 15,000 hectares in southern Kazakhstan. If the crop proves successful the planting will eventually cover one million hectares according to Kazakh media reports.

Beijing has a lot of leverage, given it has in the past two years given Kazakhstan US$ 10 billion in soft loans to help it repair its busted banking system as well as its infrastructure. But Kazakh officials have been nervous in discussing the project because of tension in the country over what’s perceived as a Chinese land-grab. Protestors, among them the former Kazakh ambassador to China, Murat Auezov, have demanded to know who’ll farm the land: inward Chinese migration is a sensitive issue in Kazakhstan.

The country’s deputy agricultural minister Arman Yevniev has attempted to calm the waters by pledging the soy project will be operated by locals – land will not be purchased or leased by Chinese investors, he said. A lack of clarity on the project from both sides seems to fanning the flames. Other foreign investors have after all taken stakes in Kazakhstan, including Russian and German firms which have both taken stakes in food companies that remains Kazakhstan’s leading exporters of wheat and flour, shipping 27 million tons of the latter in 2009.

A possible Switzerland-China FTA will bring benefits for potential investors

by Zdenka Marecka

Switzerland has been known for centuries as among the most business friendly governments in Europe, and an excellent base for working in other markets, but until recently Switzerland’s economic fate has mostly been tied with the fate of Europe:

even now the European Union accounts for about 60% of Swiss exports and more than 70% of its imports.

But as globalization has progressed, the Swiss government has had to show a commitment to attracting more business from outside their usual stomping grounds. Asia, and China in particular, have become important partners in the country’s growth. China is now Switzerland’s third largest supplier of goods and the fourth largest market for Swiss exports (after the EU, the USA and Japan).

And where there is trade, investment quickly follows. Last April the Swiss Federal Council adopted the mandate to start negotiations on a free trade agreement (FTA) between China and Switzerland, finally beginning bilateral talks on the 28th of January 2011 at the World Economic Forum in Davos. Besides discussing trade in goods and services, IPR, and environmental protection, the FTA will have specific provisions for facilitating investment.

Luxury items as investmentSwitzerland has centuries of experience developing luxury goods, which are now hungrily sought after by Chinese millionaires, not only as a mark of their newly acquired social status but more importantly as a safe yet enjoyable investment. Exports of Swiss watches to Asia grew 57% in 2010 to US$1.03 billion as Chinese customers bought products like luxury watches from brands such as Cartier, Rolex, Omega, Rado, Tissot, Piaget or Vacheron Constantin. Watch brands such as Cartier are expanding rapidly in China and other emerging economies.

Other major exports from Switzerland are chemical products, machinery, electronic products, and jewelry, with many large and small producers, with skills built over centuries of production.

A gateway to other marketsA great number of international companies use Switzerland as their headquarters, due to its multi-cultural environment, strong technology, excellent infrastructure, highly efficient and multi-lingual staff and trustworthy banking system. Its political environment is quite stable and climate pleasant. There are almost 700 North American companies there, including IBM and Google, which have set up R&D centers in the country.

The Swiss tax system is known for its ease of use, and favorable conditions for foreign investors. The fact that Switzerland is not a member of the EU might seem as a hindrance, however this should be at least partially improved by Switzerland joining Schengen.

Establishing a company is neither time-consuming not complicated. The major requirement is that at least one of those authorized to sign company’s documents must reside in Switzerland. The whole process does not usually take longer than four weeks. Most foreign companies opt for either Stock Corporation (AG) or a limited liability company (GmbH).

These qualities have recently attracted a number of Chinese companies, with GMT management, a maritime freight service and brokerage platform, and Alibaba, an ecommerce platform, among those establishing companies in Switzerland. The Bank of China has recently established an office in the country, and the Geneva Economic Development Office even went as far as opening a “Chinese desk” which provides counsel and advice in Mandarin.

China-Swiss FTAThough the Switzerland-China FTA has not yet been finalized, Switzerland is hoping to seal the deal before the European Union and thus gain more favorable terms for local companies. Swiss Economy Minister Johann Schneider-Amman said that he believed this would further enhance mutually beneficial trade and create closer bond between Switzerland and China. It will also create an excellent regulatory environment for Chinese companies looking to produce goods in Switzerland to send back home.

Despite competing for the status of the world’s largest exporting nation, the economies of Germany and China work together excellently

As the world’s first and second largest exporting economies, one might assume that China and Germany would be rivals in the increasingly competitive world of international consumption. But with highly complimentary economies, the two countries get along excellently. There are more than 800 Chinese companies doing business in Germany and over 4,500 German companies are operating in China, as Chinese companies exploit the German comparative advantage in machinery, and Germans exploit China’s advantage at light manufacturing.

This relationship is likely to only expand. This January China’s vicepremier Li Keqiang met with German Chancellor Angela Merkel and Foreign Minister Guido Westerwelle to discuss expanding bilateral trade. Bilateral trade, at US$140 billion in 2010, now accounts for almost 30% of China's commerce with the EU, while investment in Germany surpassed US$1 billion, making Germany the second largest destination for Chinese outbound investment in the world. High on the list of subject matter under discussion was relaxing conditions for Chinese companies to enter the German market.

“Germany’s requirements are highly attractive for businesses, which you can see by the number of foreign companies – including approximately 800-1,000 Chinese enterprises – already present in Germany, ” says Yi Cao, a public relations manager from Germany Trade and Invest.

China’s home in Europe

Since the start of the financial crisis there has been a sharp increase in new investments. In 2009, Sany Heavy Industry, one of China’s flagship machinery groups, invested US$140 million in a research and development center and machinery manufacturing base in Colon, North Rhine-Westphalia, the largest such investment in Europe that year.

North Rhine-Westphalia and Hesse have been the regions most benefitting from Chinese investment. China’s largest steel and mineral company Minmetals has been based here since 1986 and others such as Huawei, Genertec, Evoc, Midea or ZTE have followed. In 2009, almost fifty Chinese companies were established in or around Dusseldorf.

Frankfurt benefits as the main air hub of the region, as well as Germany’s financial center. Air China and China Airlines have both set up hubs i n Frankfurt, as have five separate mainland banks Bank of China, China Construction Bank, Bank of Communications, Industrial & Commercial Bank of China and Agricultural Bank of China, which opened its first branch in November 2009.

Frankfurt is also home to the largest Chinese consulate General in Europe and a representative office of the China International Exhibition Center Group Corporation, China’s largest trade fair and exhibition organizer. done a number of reforms to their laws in an attempt to make Germany one of the more investment friendly locations in Europe. the company must have a German address and must choose one from three major forms of corporations: The GmbH (Gesellschaft mit beschrankter Haftung) which is a limited liability company, The AG (Aktiengesellschaft) which is a stock corporation or The KGaA (Kommanditgesellschaft auf Aktien) which is a partnership limited by shares. The GmbH is the most popular as it is flexible and does not come with as many obligations as the other two forms of corporations. Once the company is set up though it is treated exactly the same as any other German company. The nationality and residence of managing directors and shareholders of a GmbH is of no importance.

To set up a GmbH a minimum capital of EUR 25,000 is required. The company must be entered into the commercial register, must be registered with the local trade office and with the tax authorities . The company must have at least one managing director and the corporation should be a member of an appropriate professional organization. Most companies should also be registered in the commercial register. “The establishment procedure guarantees the security and reliability of the data held in the public commercial register,” says Yi Cao.

The country has more flexible employment regulations than other places in Europe, including short term contracts, which can be a maximum of two years, or the first four years of the company’s existence, and allows for easy termination of contracts; temporary employment which is negotiated contractually with an agency as opposed to the employee; and “mini” jobs for low paid or very short term employees.

Visas are, as usual in Europe, difficult to obtain, though going through regional investment agencies, such as Germany Trade and Invest can cut down the time needed to process your application considerably.

The government also provides cash and labor-related incentives such as tax benefits, and low interest loans, with other incentives provided by Federal states as well. Many companies offer range of management and support services in order to help new investors to enter German market and thus make sure that the investment is straightforward and secure.

“[Germany is] constantly striving to improve the investment conditions for foreign companies. Of course the best way to make improvements is to listen to what businesses say and to take action when possible.” says Yi Cao.

The third largest island in the Medi t e r r ane an Se a , a t the crossroads between Europe, North Africa and the Middle East, Cyprus has been a strategic location throughout history.

Since joining the European Union in May 2004 and joining the European Monetary Union in 2008, Cyprus has taken strides towards guaranteeing its role as a key link in the chain of global investment, last year alone the country of 800,000 people attracted US$5.8billion in FDI inflow.

China’s part in Cyprus’s story is only just beginning. As China has expanded its presence in Africa and formed closer ties to the European Union in the wake of the financial crisis, it’s interest in Cyprus has increased. In 2009 FDI from China grew to 3.7 million from just 1.4 million in 2008. As Rania Traiforos of the Cyprus Investment Promotion Agency points out this has led to “strong and fruitful” relationship between China and Cyprus.

Open for Business

Cyprus has a very competitive tax regime boasting the lowest corporation tax in the EU at 10% for both on-shore and off-shore companies. There is also a 2% levy on wage bills to contribute to Cypriot’s pensions and other taxes, such as VAT and stamp duty, are levied on certain activities. However the government has pledged to maintain the headline 10% corporate tax rate in the long term to encourage foreign investment.

The government puts special emphasis on investment in: R&D, information communication technology, energy, shipping, banking and financial services, education, professional services, medical services and health tourism. In some of these areas Cyprus is already highly developed in the field, for example the island’s merchant fleet is the third largest in Europe and ranks among the top 10 in the world.

Cyprus is also a very open climate to invest in with good financial services and a strong legal system. In the 2011 Index of Economic Freedom produced by the Heritage Foundation and the Wall Street Journal Cyprus jumped six places to be named the 18th freest economy in the world. Although it has some restrictions on residents of non-EU states investing in tertiary education, mass media, banking, and construction, the freedom of investment in the country rose to 75%, which is on a par with the US.

A number of big Chinese firms have already taken advantage of this open environment. Huawei Technology signed a deal for 20 million with a large Cypriot telecommunications firm MTN in 2009 for upgrading network infrastructure on the island. Cyprus has a double taxation agreement in place with China, which allows tax-free repatriation of profits and capital.

Foreign investors have many of the same opportunities as Cypriots with access to finance and standard legal practices. In most areas companies can be 100% foreign owned, which gives investors good opportunities both to invest growth capital in existing enterprises on the island and to set up their own companies to take advantage of the promising business environment.

Homes in the Sun

Traditionally property has been a strong sector in Cyprus, and for investors from China it might be of special interest as the government tries to cool down local property markets. However for those looking to invest substantial amounts there are various limitations to their ability to purchase proper ty on the island. Non-EU residents are restricted to one property per person, or per married couple. Also they have to apply to the district office of the Council of Minister where they are buying the house, although this is usually a formality as long as they can point to legitimate reasons for buying the house such as investment. For those looking to make substantial investments it is possible for non-EU residents to buy more than one property in the name of a company on the island. Property developers and lawyers on the island offer advice on this.

One of the most popular ways in recent years to invest in the buoyant property market of Cyprus has been to buy unfinished properties and then sell on again to medium or long term investors after a relatively short period, often before the property is even completed. Off plan properties usually offer considerable savings compared to completed properties, but it is important to research the local market and the prices of nearby completed properties before investing.

Residents of non-EU states are issued with a long-term visa when they purchase a property. Since 2010 this visa also grants them access to the other 27 EU states, however it does not grant permanent residence in Cyprus or the EU. There have been some legal issues with property purchases in Cyprus, especially in the North, which is de facto run by a separate administration to the Republic of Cyprus, the internationally recognized government. However this political risk means that property prices are as much as 30% lower than similar areas in France and Spain. In 2010 the government of Cyprus put together a tourism action plan to improve the resorts and infrastructure in the country to the level of other European countries, which could substantially increase the value of real estate over the long term.

The right place at the right time

Shipping is already a strength of the Cypriot economy, but there is still room for investment. Cyprus is one of only two “open registry” countries in the EU so non-residents can register ships under the Cypriot flag. There are two modern deep-sea port facilities at Limassol and Larnaca and there is no in Cyprus, as well as low fees for other legal forms and procedures associated with shipping. These factors along with the island’s strategic position allowing access to the European common market and giving easy access to the Middle East, Africa and the Suez canal leading to Asia mean that shipping is sure to be an area of further growth in the future.

These shipping lanes will only make the island more attractive as the economy fully integrates with Europe while offering access to the South and East. With an excellent business climate and government support for free trade and foreign investment this Eastern outpost of Europe is looking to grow with the rise of the Middle East and Asia in economic importance. Given these larger economic factors it seems that almost any sector in Cyprus still has good potential for growth.

Canada is in many ways the ideal place to do business. It stable, dependable, friendly, and the workforce is highly educated.

And while its population may be relatively small, the sheer scope of its geographical breadth and wealth of natural resources, ensure the nation that sits atop the North American continent punches well above its demographic weight.

Both Forbes and Bloomberg recently declared the United Statesnorthern neighbor he best country in the G-20 to do business.They were not being biased facts back up this assertion. According to the prestigious KMPG Competitive Alternatives 2012 report, Canada boasts the lowest costs of doing business among all G-7 countries in R&D-intensive sectors.

Furthermore, it has the G-7 lowest tax rates overall for new business investment and the second lowest corporate tax rate in that elite group of countries. It carries the G-7s lowest ratio of net debt to GDP. And the World Economic Forum declared its banking system to be the world soundest for the sixth consecutive year. Perhaps it should come as no surprise that the nation quality of life is rated the highest in the G-7 by the Organization for Economic Co-operation (OECD), based on a variety of indicators including housing, income, jobs, environment, education and health.

As the world eleventh largest economy, Canada location hits a geographically sweet spot. From a north-south perspective, sharing a border with the United States and its massive market, and through which it can tap the large and growing market of Mexico via the NAFTA free trade agreement. Together, the three nations contribute economic output of $19 trillion each year. Looking east and west, Canada ports also provide travel times as much as two days shorter for ships traversing the Atlantic and Pacific Oceans than the United Statesdeepwater ports. Moreover, 17 of the nation 20 major cities are within a 90-minute drive of the United States border.

This would seem to be an embarrassment of riches. Yet, Canada winning streak shows no signs of letting up. To take one key sector as an example, Canada geography has blessed it with immense reserves of natural resources, with the number of projects valued at $1 billion exceeding 100 so far announced for the period of 2012-2020. Canadian resource-related projects already announced or in the pipeline for 2012-2020 account for $350 billion. Canada is also home to one of the world largest clean energy sectors. The nation harnesses everything from solar rays and wind to moving water via hydropower and the tides, and even biomass.

This is good news. s the world appetite for energy, food and raw materials continues to expand, Canadians are fortunate indeed to be in a position to help meet the demand,Hartley T. Richardson, Chair of the Canadian Council of Chief Executives says in an officially released report. ut the commodities boom is not the only nor even the most important reason for Canada recent economic resilience. Sound public policy played an even bigger role./span>

As Richardson suggests, alongside natural riches, Canada is blessed with considerable political and economic stability through its robust parliamentary democratic political system, and its equally stable and praised financial system. Not to mention abundant professional human resources, a top notch education system, excellent transportation links, technological prowess, strong intellectual property protection, openness to skilled immigrants and transparency in official dealings. The nation is also home to thriving agri-food, automotive, financial and medical services, bio-pharmaceutical sectors, with regional hubs of innovation from its east to west coasts.

These factors have given Canada an edge that has helped it cope even during the ongoing global economic malaise. In fact, Canada economy has performed relatively well when compared to the most developed countries. According to the OECD, Canada led all G-7 countries in economic growth over the past decade (2003-2012) and is projected to have one of the strongest rates of growth among G-7 economies between 2013 and 2015.Furthermore, Canada has been widely heralded for having weathered and recovered quickly from the global economic turmoil of recent years, having recouped more than all of the output and jobs lost during the recession

It comes as no surprise that Chinese foreign direct investment (FDI) to Canada have skyrocketed in recent years. Chinese FDI stock in Canada soared from a meager $113 million in 2004 to $12.0 billion by 2012 a more than one hundred fold increase.

To be sure, Canada is not alone. As The Economist put it in an article last October, as China arrived at its Rockefeller Centre moment?The question is referring to Japan heady expansion during the 1980s when the Mitsubishi Estate Company snatched up the Rockefeller Centre in Manhattan.

This reference was appropriate. Last December, an article in The International Business Times posed a similarly poignant question in its headline which reads: ancouver Skyrocketing Housing Prices: Are Mainland Chinese Investors To Blame?Apparently, Vancouver now carries the dubious distinction of having the highest real estate prices in North America and the second highest in the world after Hong Kong. On the city affluent west side, the average detached home now costs a whopping US$2 million, up 35 percent in just the past five years. On the city east side houses go for an average of C$850,000.

While these soaring real estate prices in Vancouver are largely the result of wealthy individual investors, according to the Ministry of Commerce FDI Statistical Bulletin for 2010, some 3,600 Chinese companies are now doing brisk business in 130 countries. The Heritage Foundation further estimated the total value of China total direct overseas investments and contracts in three key sectors: energy (US$284.5 billion), metals (US$98.5 billion) and technology (US$13.5 billion). Its real estate dealings in 2012 reached US$48.7 billion.

According to China Minister of Finance, China total outward FDI in 2012 amounted to US$87.8 billion; Chinese outward FDI expected to continue surging an additional 20-30 percent annually over the next five years, according to PriceWaterhouseCoopers China. According to a recent survey by the Asia Pacific Foundation of Canada, a think tank, Canada is the ninth most popular FDI destination for Chinese investors, with six percent of Chinese firms opting to invest in Canada. Given these predictions and based on trends in recent years, Canada slice of the Chinese FDI pie is bound to keep growing.

Companies like Chinese IT giant Huawei cashed in on one of Canada thriving industries: information technology. From its booming video game development trade world third largest such workforce, and growing 17 percent through this year, according to Invest in Canada 2013-2014 edition to its strong suits in enterprise application software Canada spent $3.6 billion on health IT in 2010. Public-funding initiatives such as Canada Health Infoway and the Canadian Innovation Commercialization Program, as well as many similar initiatives at the provincial level, have helped bolster the country health IT industry.

Huawei entry point into this sector was through conducting R&D on Next Generation Network (NGN) wireless data transfer technology. Alongside doubling the size of its wireless-communications research facility in Kanata, Ontario, Huawei launched a center for researching cloud computing with Carleton University.

Besides IT, innovative hubs focused on the clean tech, automotive, aerospace, agri-food, life sciences and medical device industries, among many others, also dot the country. Quality is not the only factor either. Canada can be cost effective too. Michael Worry, CEO of Nuvation Engineering told the media, hen it comes to the kind of advanced engineering we do to build high-end products never built before, wee discovered that Canada is actually more cost-effective than China.

In practical terms, advanced engineering is readily seen in the aerospace and automotive sectors, which are both doing brisk business in Canada. The aerospace industry grew by 46 percent between 2002 and 2010, at which point its revenues hit $21 billion. Japan Mitsubishi Heavy Industriessubsidiary, MHI Aerospace, opened a production facility outside Toronto in 2012 e selected Toronto because it provided us with the highly skilled workers we need many of them from around the world, which is also an asset a facility that fit the bill and proximity to our client. This is the first trial for MHI Aerospace outside Japan in more than two decades and wee demonstrated manufacturing quality and efficiency,MHI Aerospace President Haruhiko Machiyama was quoted as saying in Invest in Canada 2013-2014 Edition. Global aerospace giants Boeing, and GE, among many others, also have a large presence in Canada. Could Chinese aerospace firms do the same?

The same can be said of the automotive industry. Canada history with automobile production is long stretching back more than 100 years and today the industry accounts for 16 percent of all automobile production in the North American continent. A whopping $3 billion of capital was invested in the sector annually from 2002 to 2011. Automotive giants from Europe, Japan and the United States have a large footprint in Canada.

It doesn stop at production either. With $460 million being pumped into R&D efforts during the same period, high praise has been offered to efforts in the R&D of the emerging electric and hybrid car market. Of note, Invest in Canada 2013-2014 Edition mentions Dr. Ali Emadi at McMaster University whose research is making a splash in this field. This is an under tapped area for Chinese investors.

Another area ripe with FDI potential is the life sciences sector. When it comes to life sciences an umbrella term that contains biopharmaceutical terrain as well as the development and manufacturing of medical devices Ontario and Quebec are the nation two main strongholds. According to official data, some 40,000 employees work at more than 300 life sciences companies in these two provinces alone. Global heavy hitters Merck, Pfizer and Novartis have significant investments in Ontario and Quebec as well.

Owing to geography, perhaps it should come as no surprise that agri-food is Canada largest manufacturing sector. All told, 297,000 people work to generate $97.3 billion worth of agri-food shipments, from grains and oils to supplements, probiotics and various fine foods. Of interest to China with its burgeoning middle class demand for consumer products from abroad Canada sent a hefty amount of processed food and beverages to China, along with the United States, Japan and Mexico. Altogether, the nation exported $24.3 billion worth of processed items in 2012.

Canada falls within the top three countries worldwide in production of lentils, peas, linseed, mustard seed, oats and rapeseed, according to the UN Food and Agriculture Organization. Further, innovative R&D is regularly taking place in Canadian laboratory dedicated to formulating the next healthy thing. Canola oil was actually made in Canada literally and its name means Canadian oil, low acid. Today the rapeseed-derived oil brings the nation economy $15 billion annually.

Something that may interest Chinese investors looking for a culinary gold mine: Canadian production of specialty foods like foie gras, kimchi, prosciutto ham and soybeans used to create tofu is on the rise, with new immigrants often behind the facilities built to make such items.

It would seem that there is no end in sight in terms of the potential areas awaiting Chinese FDI. But recent developments have imposed ceilings in a few key areas. For one, the ens of thousands of millionaire nvestor-classmigrants from China have entered Canada simply by loaning C$800,000 ($750,000) apiece in cash to the local provincial government interest-free for five years,writes the International Business Times. But this practice came to an end in 2010 following a backlash of criticism and complaints.

More recently, Business Week reported that the Canadian government said it would reject out of hand any attempted takeover of BlackBerry by Chinese computer giant Lenovo due to the fact that BlackBerry is intimately tied up with the government, which would pose potential security concerns. A report in The Globe and Mail confirmed the same.

End of last year, Canadian Prime Minister Stephen Harper reiterated his commitment to onstructive nationalismfirst voiced in December 2012 to curtail the buying of strategic assets and oil sands businesses by state-owned companies, with a focus on China. Last December, Harper likened the task of developing the world third largest oil reserves to the building of the Great Wall, Bloomberg reported. A related report in the South China Morning Post suggested that this policy would precipitate a rush by private Chinese firms.

While these developments may seem like bumps in the road for Chinese investors with their eyes on Canada, the nation infrastructure, stability and openness to new immigrants will likely ensure that Chinese investment in Canada will continue to expand.

Perhaps the most significant gear in this well-oiled business machine is Canada rock solid financial system. Moody consistently ranks its banking system as the most stable worldwide, saying: anada financial capital has enjoyed a rapid expansion in recent years and is increasingly being recognized as a centre of global banking. Toronto international profile will continue to rise through the next decade

In the last few years Switzerland has become one of China's most important European business partners and the relationship appears to be looking brighter every month. Last summer the two countries established a bilateral Free Trade Agreement (FTA CH-CN) that will increase trade between the two economies, and Switzerland's government in 2012 made an outline for establishing the country as a European hub for RMB trade and investment.

These events are clear signs that Switzerland has opened its doors to Chinese investment and is encouraging the Chinese business community and the government to take Switzerland seriously in considering it as a potential European RMB hub and a center of Chinese business in Europe.

Although Switzerland is still in the process of becoming a major RMB hub while a currency swap agreement is negotiated between the two Central Banks and while it competes with other potential RMB centers in Europe, including London, Frankfurt and Luxembourg, Chinese investors can find a plethora of opportunities in Switzerland.

Pundits and scholars have been debating for years that London, Singapore, Hong Kong, Tokyo and some even say Shanghai, have superior wealth management capabilities and products than Switzerland, but Switzerland is still the world's leading wealth management center if one looks at the numbers. Switzerland continues to be able to attract the world's best wealth management and private banking talent because of the country's high pay, the clean and beautiful sceneries in Zurich and Geneva, and because of its long-standing reputation of having the top talent in the world in finance.

According to the Deloitte's report called, The Deloitte Wealth Management Centre Ranking 2013: Measuring Competitiveness of International Private Wealth Management in Switzerland, Switzerland maintained its position as the world's leading wealth management center due to its open markets, its providers capabilities, the country's stability, and its ideal tax and regulatory framework.

The wealth management and private banking industry in Switzerland is more sophisticated and advanced many than other global financial centers because it utilizes multiple business models to ensure that it has excellent customer service and that its relationship managers are highly trained and knowledgeable about custom and tailored services and products for its clients. Swiss banks offer sophisticated products for their high-net-worth-clients (HNWI) and ultra-high-net-worth individuals (UHNWI) clients that can not be found in many countries, including multinational hedge funds, complex, high yielding derivatives, real estate, equities, fixed income products, mutual funds and ETFs that have access across the globe into exotic markets and businesses.

A report from the Swiss Bankers Association called The Swiss Financial Centre-Ready for Renminbi, says Swiss banks are tailoring their services to meet the demands of specifically Mainland Chinese clients. The report states, "Now Banks in Switzerland offer a wide range of products and services that will help to further establish the RMB in Switzerland and strengthen the internationalization of the Chinese currency. Banks with presence in the People's Republic of China, Hong Kong or Singapore, are expanding their product shelf in Switzerland."

One of the main strengths of Switzerland's financial system and wealth management industry is that although the country does not accept tax evaders' capital, the financial center ensures that its clients maintain their privacy. Karolina Frischkopf, Financial Counselor, Deputy Head of Economic Section from the Embassy of Switzerland said: "Privacy and data protection are still main assets of Switzerland's financial services industry."

Switzerland's Booming Biotech Industry Open for Investment

Switzerland has a wide range of investments in finance, but the country also has other major investment opportunities for investors. The country has many advanced industries that are open for investment, including, precision machinery, but its main high-growth industry is biotech. This industry is growing rapidly as emerging markets and even developed markets need these advanced services more and more.

Switzerland is a global leader in biotechnology along with the United States. With a highly educated and skilled workforce, Switzerland is also home to approximately 250 small and medium-sized enterprises with activities in the biotech area. Having identified biotechnology as a key factor for future development, the Swiss Government has undertaken various efforts to create an attractive business environment in this field. The proximity to the prestigious Swiss chemical and pharmaceutical companies and to national and international knowledge clusters makes Switzerland an ideal place to invest in biotechnology.

International investors will find it easy to find a growing and emerging biotechnology company in Switzerland as many of them are seeking venture capital, which is currently in short supply. Henri B. Meier, the former CFO of Roche and today's Chairman of the Board of HBM BioVenture, said in the Swiss Biotech Report 2013, that biotechnology industry is seeking for new investors who can fund emerging start-ups that are brining new technologies and innovations in the industry. "Switzerland has only a few venture capital companies and even fewer which focus on a sector like biotech/pharma. Venture capital for early-stage companies hardly exists in this country, investments tending to be made abroad. This is the time for investors to seek the right people to find lucrative long-term investments in Switzerland's' biotechnology industry.

Europe's Future RMB Center: Switzerland's Zurich

Despite the fact that the RMB is still largely dictated by the Chinese central bank and gives its investors few investment options, the RMB has attracted a large number of global cities that are committed to trade and invest in the currency.

London, Luxembourg, Paris, and Frankfurt have all made statements that they are the proper cities to be the European trading hub for the RMB. Yet many Chinese investors and China's business community are paying attention to Switzerland's actions towards becoming Europe's RMB center.

Simply, Switzerland's ideal and convenient location in the heart of Europe, its strong financial services industry, its strong currency, and diversified industries, make it an obvious location for a RMB center. Frischkopf said: "Switzerland is well-positioned to be a RMB center. The country maintains a leading role in cross-border private wealth management. It benefits from an abundance of expertise in managing institutional assets for pension funds, insurance companies, sovereign wealth funds, family offices and corporates. It has become a leading center for commodity trading. Quite obviously, the Swiss financial sector can support the further extension of RMB business overseas and thus foster trade and investment in China." Not only are Swiss businesses interested in working more with China to open markets, but also Switzerland's government has made it clear that it attends on becoming a RMB center. Frischkopf mentioned: "The Swiss Government is committed to providing the necessary institutional framework for this development. The newly established financial dialogue with China provides a strong base for strengthening financial sector cooperation between our two countries. Furthermore, there are currently talks between the two Central Banks on a currency swap agreement." Indeed Switzerland is behind the curve on setting up a currency trade swap with China, but recently Switzerland's central bank opened talks with its Chinese counterpart to swap currencies. This has raised Swiss hopes of attaining a RMB hub status. In early December 2013, the Swiss National Bank (SNB) said it had engaged with the People's Bank of China (PBOC) to set up a swap arrangement, but declined to reveal what volume of currencies would be swapped or how long it would take to achieve this result. The SBA said commercial Chinese banks had unofficially sent "encouraging signals" about setting up operations in Switzerland in the future. It is hoped they would fare better than the Bank of China, which soldits Geneva operations in 2012 after a failed four-year stint in Switzerland. A currency swap between Switzerland and China would be a major step in Switzerland becoming a RMB center, as currency swap agreement allows high volumes of RMB to enter a country, while an offshore branch of a Chinese bank is needed to process RMB transactions.

The Opportunities that Derive from China and Switzerland's FTA

On July 6, 2013 Federal Council member Johann N. Schneider-Amman and Chinese Trade Minister Gao Hucheng signed a bilateral Free Trade Agreement (FTA CH-CN) between Switzerland and China. Switzerland is therefore the first continental European country with which China has completed such an agreement. The FTA CH-CN agreement has just been ratified by the Swiss Parliament in March 2014 and is expected to come into effect in July 2014. Once the FTA goes into effect, as much as 99.7% of Chinese exports to Switzerland will be exempted from tariffs, while 84.2% of Swiss exports to China will not have any tariffs.

Chinese Commerce Minister Gao Hucheng (R) toasts with Swiss Economy Minister Johann Schneider-Ammann in front of the national flags of Switzerland (L) and China after signing a free-trade agreement at China's Ministry of Commerce in Beijing July 6, 2013. Source: REUTERS/CHINA DAILY

In a recent report called, Switzerland-China Free Trade Agreement: A great opportunity for the Swiss import and export industry, KPMG praised the agreement and stated that it will significantly boost the opportunities for Chinese businesses to work in and find investment opportunities in Switzerland. "The comprehensive FTA CH-CN agreement will provide better access for Swiss goods and services to the large and fast-growing Chinese market, and facilitate trade between the two nations. It enables the Swiss economy to expand commerce with an already important trading partner. To this end, the FTA CH-CN provides a regulated playing field that is recognized by both parties. Analysis of the supply chain can uncover selective advantages and so increase competitiveness.

There is currently an autonomous preferential arrangement as Most Favored Nation (MFN) for industrial goods, which will be replaced with the introduction of the bilateral agreement. Most goods originating from China have already now a zero tariff rate for import into Switzerland under the preferential treatment Switzerland grants to China. With the entry into force of the FTA products such as textiles and shoes, coming from the right Origin, would also be handled as preferential goods when it comes to customs duties on entry into Switzerland. This means that from then on Switzerland would also levy no tariffs on these goods. Chinese investors and business owners will benefit from the FTA. Zero tariffs and free import channels for cutting-edge technology from Switzerland will satisfy the growing needs of Chinese businesses and help accelerate the country's industrial transformation and upgrading. Currently more than 60 Chinese companies have expanded their business in the European market by setting up branches in Switzerland. The number is expected to grow significantly following the FTA in months to come. Laurent Knecht, Investment Promotion Director, Swiss Business Hub, said that the FTA would continue to construct a framework that allows Chinese investors and business decision makers to explore business opportunities in Switzerland. "The FTA will give additional impetus to the economic relations between China and Switzerland by stimulating trade and investment flows between the two economies." Knecht added, "About 70 major Chinese companies set up in Switzerland and more new projects are explored by Chinese investors." Indeed the first of China's Premier visit to Switzerland last year to sign the FTA brought strong awareness of Switzerland to the Chinese business community.

The Future Business Opportunities Between China and Switzerland

Clearly the growing friendly business relations between Switzerland and China are going to continue to create enticing investment opportunities for Chinese business owners and investors in the European country. Since China is already the third largest research and development spender, right behind the USA and Japan, they will find many opportunities to rapidly develop their research capabilities in Switzerland. The financial products in the country will also continue to attract wealthy Chinese investors, and when the FTA effects are felt between the countries' economies, we will see even more Chinese investors and business leaders seeking talent, resources, technology and expertise in Switzerland.

Knecht concluded, "Switzerland will welcome more affiliates of Chinese companies in the near future as well as see more well established Chinese companies in Europe setting up their regional headquarters in Switzerland, which has proven to be a center of global and regional multinational headquarters."